Accelerate your business
In today’s competitive world, speed and cost control are among the most important value-creation factors for customers and shareholders alike. Exogenous growth via M&A can help your company save time and grow faster, while acquiring missing competences and improving the economics of your business. If your company does not engage in M&A, then your competition will, driven by a combination of objectives:
- Market and portfolio: Acquire complementary businesses to improve market footprint or close portfolio gaps
- Innovation: Invest in promising start-ups or disruptive technologies that would be difficult to develop in house
- Costs: Create additional economies of scale (or scope), with a view to decreasing unit costs and improving profit margins.
Beyond the financial performance of the target, many areas must be investigated during an M&A engagement, in order to assess the risks, confirm the buyer’s integration strategy and validate the transaction price: the customer base, sales channels, competitive strengths, IPRs, R&D, supply chain, human resources and culture, to name but a few!
The real challenges of M&A projects
Based on our long-time experience in Mergers and Acquisitions, we believe that the true challenges of M&A engagements are:
- Finding the target that is right for you: Clarity and sharpness in the buyer’s strategic positioning, as well as portfolio focus, are paramount to conducting an efficient and successful acquisition process. More often than not, we see that buyers haven’t spent enough time developing selection criteria that are crystal-clear and consistent with the company’s long-term objectives. This is why we are here to help! Even when buyers know exactly what they are looking for, the process of target screening and selection can remain challenging, especially in foreign markets. We believe that buyers can greatly benefit from external professional support, to improve the quality of the target search from the start, and increase the chance that the journey will lead to a beneficial destination i.e. to closing.
- Due Diligence: Due diligences need to be managed and undertaken thoroughly, and not as an after-thought. Beyond the analysis of tangible factors such as financials, legal, operational, HR and tax, the due diligence phase is critical to confirm (or infirm) the high-level of mind-share between the buyer and the target’s key people.
- Business planning and valuation: Even when the transaction price is known in advance, business planning remains extremely important: firstly to estimate the value of the business ‘as-is’ and confirm that the price expectation is reasonable; secondly to quantify how the acquired company could be further developed and create value for the buyer. The business plan needs to address potential synergies on the cost side, cross-selling opportunities, the ability to enter new markets and other value-creating levers, such as tax benefits.
- Integration planning: Business planning should be complemented with Integration planning, providing a 12-18 months roadmap that details the key activities and initiatives that must be undertaken after closing (products, markets, operations, legal, finance, IT systems). In our experience, there is strong correlation between successful M&A deals and adequate planning during the acquisition phase.
Professional support provided by M&A experts who come from industry, understand the business and know what it takes to reach a successful outcome is therefore key to any M&A transaction.